Net income per books (after-tax) $420,000

Taxable income 305,000

Federal income tax liability 88,200

Dividends paid to shareholders 36,000

Interest income from tax-exempt bonds 75,000

Life insurance proceeds received as a result of death of

Belangerss president 200,000

Premiums paid on policy on life of Belangers president 15,500

Excess of capital losses over capital gains 50,000

Book Depreciation 60,000

Tax Depreciation 90,000

Retained earnings at beginning of year 375,000

28 Total Habilities and shareholders equity Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return Note: The corporation may be required to file Schedule M-3. See instructions. 1 Net income (loss) per books 7 Income recorded on books this year 2 Federal income tax per books not included on this return (itemize): 3 Excess of capital losses over capital gains Tax-exempt interest $ 4 Income subject to tax not recorded on books this year (itemize) 8 Deductions on this return not charged 5 Expenses recorded on books this year not against book income this year (itemize): deducted on this return (itemize): a Depreciation a Depreciation b Charitable contributions $ b Charitable contributions. $ c Travel and entertainment. 9 Add lines 7 and 8 6 Add lines 1 through 5. 10 Income (page 1, line 28)-line 6 less line 9 28 Total Habilities and shareholders equity Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return Note: The corporation may be required to file Schedule M-3. See instructions. 1 Net income (loss) per books 7 Income recorded on books this year 2 Federal income tax per books not included on this return (itemize): 3 Excess of capital losses over capital gains Tax-exempt interest $ 4 Income subject to tax not recorded on books this year (itemize) 8 Deductions on this return not charged 5 Expenses recorded on books this year not against book income this year (itemize): deducted on this return (itemize): a Depreciation a Depreciation b Charitable contributions $ b Charitable contributions. $ c Travel and entertainment. 9 Add lines 7 and 8 6 Add lines 1 through 5. 10 Income (page 1, line 28)-line 6 less line 9